Aspen's slippery slope in Italy
Aspen Pharmacare, South Africa's generic drug manufacturer, has been fined €5-million (about R77-million) by Italy's competition authorities for increasing the prices of old blood-cancer drugs, potentially disrupting the supply of them.
Aspen is the only supplier of these older drugs, which are used in some blood cancers and blood disorders, to Italy after buying the rights from GlaxoSmithKline.
But the competition authorities in Italy accused Aspen of "aggressively trying to raise prices of generic drugs between 300% to 1500%".
"Aspen started negotiations with the Italian Medicines Agency with the sole aim to obtain a high increase in prices, even in the absence of any necessary economic justifications," the Italian competition commission said.
"The negotiation strategy adopted by Aspen was so aggressive as to reach the credible threat of interrupting the direct supply of the drugs to the Italian market."
The fine is less than 1% of Aspen's market capitalisation.
This is not the first instance of manufacturers with a monopoly on old, cheap drugs raising prices.
In 2015 Turing CEO Martin Shkreli obtained the manufacturing licence for the antiparasitic drug Daraprim in the US and raised its price by 5556%, from $13.50 to $750 a tablet.
The price for an EpiPen, a device used to treat severe allergic reactions with a shot of lifesaving adrenalin, rose so high that US presidential hopeful Hilary Clinton entered the debate by calling for a drop in its price.
KwaZulu-Natal pharmacologist Andy Gray said: "The phenomenon of generic firms taking advantage of monopoly situations in respect of older, off-patent products has received much media attention in the past year.
"Whether the product is pyrimethamine (Daraprim), or adrenalin, or an older cancer treatment, the commercial logic seems to be the same - to maximise profits, regardless of the consequences to patients or health systems. Governments can no longer afford to ignore such situations," he said.
Aspen Italy said it had negotiated the prices with the Italian health regulator.
"The finding relates to the price increases of four blood-disease drugs approved in Italy in 2013. These drugs had not been subjected to any price increases in Italy for more than 50 years," Aspen said.
Looking just at the percentage price increases was "misleading given the exceptionally low base prices".
It said it would appeal and believed it would win.
Market access scientist at C&C Dr Joao Carapinha said: "The fine imposed under Article 102 of the Treaty on the Functioning of the European Union should not be taken lightly.
It suggests that Aspen abused its dominant position in the EU market by imposing unfair prices or limiting production. "
He praised the Italian authorities involvement.
"Unlike the USA's Martin Shrekli's meteorite escalation of daraprim's price in August 2015 that saw no effective response from regulators in the USA, the Italian Medicines Agency response to Aspen's price increase was appropriate, but reactive."
He warned: "Old medicines with little or no competition are increasingly at risk of actual or planned supply chain disruptions and ad-hoc price escalations."
Aspen, a listed company, did not make shareholders aware of the fine.